Channel NewsAsia
Updated: 12/29/2012 00:49 | By Channel NewsAsia

SBF calls for more realistic productivity growth target

SBF calls for more realistic productivity growth target

SBF calls for more realistic productivity growth target

SINGAPORE: Singapore businesses said the two to three per cent productivity growth target that the government is aiming for is too stretched.

In a position paper on population, the Singapore Business Federation is calling for a more realistic target — one that’s in line with the country’s ageing workforce and slower manpower growth.

It’s a rough road ahead for Singapore businesses.

That’s the message from the Singapore Business Federation, which represents more than 18,000 local and foreign companies, as its members grapple with soaring costs and a relentless labour crunch.

So trying to hit the productivity growth target of two to three per cent a year, over the next 10 years, is simply too much.

Victor Tay, Chief Operating Officer of Singapore Business Federation, said: "In the last quarter, productivity was negative 3.5 per cent. So that means we’ve not been improving. The reasons why, it’s a reality issue. If there’re not enough workers, they are not able to implement productivity projects. When there’re not enough workers, they’re not able to, businesses aren’t able to deliver even down to projects to their customers’ expectation."

For consumers, Mr Tay said this could mean lower service levels, especially in the retail sector.

"Citizens are feeling that, be it from the hotel experience from restaurant experience to the retail experience as well," he said.

This could be a positive challenge for businesses, says member of the Government Parliamentary Committee for Manpower Zaqy Mohamad.

"In the long term, there will be businesses that adapt and consumers do have a choice. The ones that adapt the fastest and in the most efficient way will win consumers over," he said.

From the worker’s perspective, he says there’s recognition of the tough spot businesses are in.

But it remains the employer’s responsibility to drive productivity growth.

Mr Zaqy said: "Productivity is meaningful for workers only if they also see a corresponding increase in wages. For businesses, what’s difficult for them is to invest in productivity gains, but also having to see wage increase for workers as well. That’s where business will feel the crunch, in terms of being hit with costs on both sides."

What’s needed, businesses say, is more time and resources.

The Business Federation is calling for a stay on any further tightening of foreign manpower for one to two years. This is to give businesses time to adjust and raise productivity.

The federation says it will encourage more companies to take up existing government initiatives.

But it’s also calling for more targeted help. For instance, tax breaks for those whose female employees go on maternity leave.

The federation’s report is part of a consultation process by the National Population and Talent Division, which is putting together a White Paper on Singapore’s population and immigration policies.

The paper is expected to be released in January.

Responding to queries from Channel NewsAsia, the Manpower Ministry says Singapore needs to stay the course towards restructuring and productivity—driven growth.

An MOM spokesperson says the ministry recognises the need to give businesses lead time when tightening foreign manpower. And it has done so with every round of tightening.

At the same time, it’s urging businesses not to delay the necessary business restructuring and productivity investments.

— CNA/ck/de

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